City scales back drain fees after outcry from Detroit businesses, churches

Detroit's water department is preparing to scale back a controversial storm water drainage fee after backlash from businesses and churches that got hit with the hefty $750-per-acre monthly charge.

The city's Board of Water Commissioners will vote Wednesday on a plan to reduce the drainage fee to $125 per acre until July and then phase in increases over the next five fiscal years to $677 by July 2022, Detroit Water and Sewerage Department Director Gary Brown said.

Detroit began imposing the fee in July 2015 on the owners of 22,000 parcels with impervious surfaces such as roofs and parking lots that "weren't paying anything at all," Brown said.

"This essentially is giving them an opportunity to have five years to build green infrastructure projects and get a credit to permanently reduce their costs," Brown told Crain's.

Mayor Mike Duggan, who is facing re-election this year, has taken heat from the city's politically-influential pastors over the fee and the financial burden it has placed on their congregations.

"They say it's not taxation, but to me it's a way to tax the church," said Everett Jennings, pastor of New Providence Baptist Church on Plymouth Road.

Jennings said the monthly water bill for his northwest side church skyrocketed from $650 per month to $7,500 per month after the city began assessing the storm water drainage fee.

The drainage fee and how it was assessed has been a constant headache for Phil Cifuentes, owner and CEO of Omaha Automation Inc., a small automotive and military manufacturing supplier near the Detroit-Hamtramck border.

"I came into a system that wasn't charging anyone," Cifuentes said. "And then I came into a system that, two years later, was charging the largest water sewerage rates in the country."

Omaha got billed $15,630 in 2015 and the assessment dated back several years, Cifuentes said.

"If they come down through this new rate, how does that affect everyone who owes them outstanding charges like the $10,000 I owe?" Cifuentes asked.

Property owners will still owe the water department past-due charges at the higher rate, but get relief for the next few years, Brown said.

The new phased-in rate structure going before the city water board Wednesday will start at $125 effective April 1, double on July 1, increase to $375 in July 2018, $500 in July 2019 and $626 in July 2020. In July 2021, the per-acre fee will increase to $651, followed by a final hike of $26 in July 2022.

"By having a longer five-year opportunity to phase in, it gives them an opportunity to better budget for the new cost and also to go out and have a green infrastructure project designed," Brown said.

Water department customers that were originally being charged $852 per impervious acre will see their rate gradually reduced to $677 by July 2022 to match the rate charged to the 22,000 parcels in the new five-year phased-in plan, Brown said.

"This all goes away and everybody goes to one flat rate at the end of five years," Brown said.

The water department is going to offer grants of up to $50,000 for half of the cost of water retention projects on the sites of large churches and businesses to reduce the amount of storm water and impervious surfaces, Brown said.

Brown has budgeted $5 million for the grants.

Cifuentes said the drainage fee has been "a real deterrent" to his plans to buy an adjoining 2.5-acre parcel and build another 40,000-square-foot manufacturing facility.

"Until this all gets figured out, this is just staying idle," Cifuentes said.

The drainage fee was partly a response to a 2015 class action lawsuit Michigan Warehousing Group LLC brought against the city and its water department for charging some property owners the $852 per acre monthly fee and others nothing or as little as $20 based on the size of their water meter pipe.

"We're trying to settle that lawsuit by getting everyone on to a more fair and equitable rate system by putting them on the same rate," Brown said.

Omaha Automation is part of the class action lawsuit, Cifuentes said.

The nonpaying customers included industrial parcels, commercial buildings, churches and residential parcels where Detroiters have bought vacant side lots and built additional parking spaces, Brown said.

"Parking lots were a big part of it — and they weren't getting a bill because they didn't have an account," Brown said.

Churches in Detroit got big bills because of their large parking lots.

Shield of Faith Church, 13600 Van Dyke, has racked up a $65,000 bill with the city water department because the storm water drainage fee costs the 300-member congregation nearly $5,000 per month, according to Pastor James Jennings.

"It's actually causing us not to be able to meet our expenses, and we're about to go under unless God works a miracle," Jennings said last week before the rollback was unveiled.

The drainage fee also was imposed to pay for needed sewer infrastructure upgrades and try to reduce the city's overall storm water runoff that causes combined sewage water outflows to discharge into the Detroit River and River Rouge in violation of state and federal environmental laws.

The U.S. Environmental Protection Agency has required Detroit to eliminate all sewage discharges by 2022, Brown said.

The sewage releases vary depending on heavy rainstorms.

Last year, the city released 800 million gallons of combined sewage and storm water, according to DWSD.

In 2014, a torrential August rain storm contributed to 6.8 billion gallons of untreated sewage and storm water being released — and widespread basement flooding in the city and northern suburbs.